How Do You Make Money with Euro-Based Stablecoins?
With EUR stablecoins, you can earn money in more stable ways than trading or mining unpegged crypto assets. For example:
Staking. This means locking up your euro stablecoins as or with a network validator and earning a cut of the fees charged for network validation (click here for our list of top staking yields).
Lending. You can get some truly great yields from borrowers, many of whom are betting that an unpegged crypto asset like bitcoin will rise in value vs. the euro (click here for our list of top crypto lending platforms).
Yield farming. You can put your EUR stablecoins into liquidity pools for automated market makers on crypto exchanges in return for high-yield interest rates (click here for our list of Best Yield Farming Rates).
How Price-Stable Are Euro-Based Stablecoins?
Euro-based stablecoins are designed to be pegged to the euro and tend to do a good job of it. Even so, their prices can fluctuate a few cents above and below the 1 EUR mark.
These fluctuations occur as the stablecoin issuers manage supply on the market to keep the peg.
It's possible a EUR stablecoin could lose its peg as the TerraUSD (UST) notoriously did. To avoid getting burned in such a crash, it's worth spending a few minutes investigating how a EUR stablecoin is backed.
Euro stablecoins backed 1:1 by fiat euros ("fully backed" or "reserve backed" stablecoins) are generally the safest, as you know there's "money in the bank" if all stablecoin holders want to redeem all their holdings at once.
Euro stablecoins backed by algorithms ("algorithmic stablecoins") are generally the riskiest, as these rely on complicated math to manage supply and demand. Such math can fail during periods of strong human emotion.
Euro stablecoins backed by other cryptocurrencies are somewhere in between. They're better than nothing, but not as good as fiat backed. If the entire crypto market plummets and everyone wants to withdraw, the stablecoin could go bust.
In the table above, we've indicated how each of these euro-based stablecoins are backed, how the backing is verified, and when the last verifications took place.
All stablecoins carry some degree of risk, so always do your due diligence, and don't invest more than you're willing to lose.